Hidden Home Selling Costs You Shouldn't Ignore

When people think about the costs of selling a home, they automatically think of things like the real estate commission and closing costs. While these are undoubtedly important expenses to consider, there are other hidden costs that can add up surprisingly quickly – and which often get overlooked. In this article, we’ll look at some of the most common hidden home selling costs.

Hidden Home Selling CostsPricing
Homeowners Insurance$500 – $1,000 per year
Home Appraisal$300 to $600.  
Home Inspection$300 to $500.  
Homeowners Association Fees$200 to $400
Home Warranties$300 to $600
Closing Cost2% to 5% of the purchase price
Cleaning and Decluttering$200
Emergency RepairingWater heater – $1,000 to $3,000 Roofing – $1,200 to $30,000
Real estate commission2.27% to 3.39% of the final sale price
Cost of Temporary HousingMore than $1,000
Staging$600 to $1,200
Cost of Hiring a Moving Company$500 to $2,000

Also Read: Inspection vs. Appraisal Differences for Buyers

Homeowners Insurance

If you have a mortgage on your home, your lender will require you to maintain homeowners insurance. The cost of homeowners insurance would vary depending on the value of your home and the level of coverage you choose, but it typically ranges from $500 to $1,000 per year. If you don’t have a mortgage, it’s still a good idea to ensure your home against fire, theft, and other risks.

Because you have various options to choose from, some first-time buyers may believe that homeowners insurance is optional — but this isn’t the case. If you don’t acquire homeowners insurance, your lender may buy it and charge you for it. You may believe that the most basic level of coverage is the best option, but if you live in a high-risk area for fire or flooding, more comprehensive coverage might be worthwhile to protect your finances. It’s vital to compare the cost of homeowners insurance against the hazards that come with its location when assessing whether it’s worth it.

Home Appraisal

When it comes to closing a house, an appraisal is used to determine the property’s real market value. A qualified third-party appraiser will evaluate the condition, structural soundness, health and safety risks, the property’s visible flaws, and any required upgrades or improvements. The appraisal serves both buyer and lender interests by ensuring that the mortgage amount is not greater than the property’s value. The cost for an appraisal typically ranges from $300 to $600. However, it may vary based on several factors such as location, square footage, age of the home, and whether it is a single-family home, condo, or co-op.

Home Inspection

Home Inspection evaluates the present state of the property to reveal any issues, damage, or safety concerns, and it takes place after you’ve signed the purchase agreement. The inspection isn’t the same as the appraisal or last walkthrough, which are two other procedures that home sellers must undergo. The cost of a property inspection may vary depending on the size and age of the house and any structural issues that need to be addressed. According to Realtor.com, the average home inspection costs between $300 and $500.

While the home inspection will cost you money, the complete report may provide useful information and help you save money in the long run. If you find significant damage or flaws that impact the property’s value, you can use the home inspection report to renegotiate the purchase agreement with the buyer or even back out of the deal altogether.

See also: Importance of Home Inspection

Homeowners Association Fees

If you live in a neighborhood with a homeowners association, you’ll have to pay an ongoing or monthly charge to maintain your community and any common areas and shared facilities. Swimming pools, clubhouses, lounges, landscaped outdoor spaces, parking garages, and security gates are all examples of HOA dues. Certain utilities, such as water and trash collection, may also be included in your fees. The cost of homeowners association fees varies depending on the community, but it typically ranges from $200 to $400 per month.

The amount of space you take up in comparison to the rest of the community is another thing that might influence your HOA charge. For example, a family of four in a four-bedroom condo will most likely pay a greater HOA fee than someone who lives alone in a smaller apartment. While there are advantages to living in a homeowners association, the fees can add up, so it’s important to factor them into your budget.

Home Warranties

Some sellers offer home warranties as an incentive to buyers. These warranties generally cover major systems and appliances in the home for a set period (usually one year). The cost of a home warranty varies depending on the size of the home and the coverage that’s included, but it typically ranges from $300 to $600. Home warranties can be a great way to ensure that the buyer doesn’t have to worry about unexpected repair costs after closing.

Property Tax

The amount you pay in property taxes will differ depending on where you reside since local governments are the ones who collect them. In addition to your area’s property tax rate, what you owe will be determined by the worth of your home.

Property taxes will be deducted from each monthly mortgage payment if you have an escrow account set up for your house loan. Otherwise, you’ll need to pay your taxes in full when they’re due. To get an idea of how much property taxes you’ll pay, multiply the assessed value of your home by your area’s property tax rate, which may be found on your municipality’s website.

Closing Costs

Closing costs are the fees associated with transferring property ownership from the seller to the buyer. These costs can vary widely depending on the property type and location, but they typically range from 2% to 5% of the purchase price.

When you buy a home, you’ll make a down payment and pay any necessary fees to own the property in your name. The following are some of the fees you might incur as a homeowner: Fees charged by an appraisal company, a closing or escrow fee is paid to the escrow agent, home insurance for the first year, loan origination fees, mortgage discount points (also known as discount points), which are prepaid to your lender to lower the interest rate on your home, property taxes, and recording fees.

If your down payment is less than 20% of the purchase price, you’ll need private mortgage insurance. To protect yourself against claims that the legal ownership of the property has been disputed, you’ll also want title insurance. Other costs include attorney’s fees, which some states require to review your closing papers.

These closing costs might appear inexpensive when considered separately, but they will add up when combined. You’ll probably need to put aside several thousand dollars to cover them.

Related: Credits For First-Time Homebuyers

Cleaning And Decluttering

If your home is cluttered or outdated, it’s likely to sell for less than it would otherwise. In some cases, you may need to hire a professional declutterer or home stager to help get your property into tip-top shape. The cost of these services can vary widely, but you should expect to pay at least a few hundred dollars.

Once your home is decluttered, it will need to be cleaned from top to bottom – and any necessary repairs should be made as well. A professional cleaning service will typically charge around $200, while repairs can range in price from a few hundred dollars to several thousand. These costs can add up quickly, especially if you have a large home or if there are significant repair issues. And don’t forget – you’ll also need to clean the gutters, trim the hedges, and do other necessary yard work.

Emergency Repairing

Repairs might be costly and time-sensitive, depending on the extent of the damage. If your central heating system breaks down in the middle of winter or pipe bursts, you’ll need to get it fixed right away, which means these expenses may catch you off guard.

According to The Home Depot, a new water heater might cost anywhere from $1,000 to $3,000 to purchase and install. Roof replacements can cost anywhere from $1,200 to $30,000. The average price per square foot for a roofing company is between $3.50 and $5.00.

You may face the following emergency home repairs: Water damage, Roof damage, Furnace failure, Broken air-conditioning system or unit, Electrical problems, and a broken water heater.

Real Estate Commission

The real estate commission is typically the biggest single expense associated with selling a home. The typical real estate fee is between 2.27% and 3.29 percent (2.80% on average) of the final sale price of your home, so every little bit helps. However, it’s important to remember that the commission is negotiable – so don’t be afraid to ask for a lower rate. In many cases, you’ll be able to get the buyer’s agent’s commission reduced or even waived entirely.

Expenses of Interior and Exterior Maintenance

A well-maintained home will sell more quickly and for a higher price than a home that needs repairs. Before putting your home on the market, it’s good to make any necessary repairs and give the property a fresh coat of paint (inside and out). Depending on the extent of the work that needs to be done, the cost of maintenance and repairs can range from a few hundred dollars to several thousand.

Mortgage Payoff

If you still have a mortgage on your home, you’ll need to pay it off in full before selling. The cost of doing this will vary depending on the terms of your mortgage and the current market interest rates. In most cases, it’s advisable to pay off the mortgage before selling – especially if you’re expecting to get a reasonable price for your home.

Staging Your Home

The cost of staging your home can be a hidden expense that many sellers overlook. If you’re not familiar with the term, staging is the process of preparing your home for sale by making it look as attractive as possible to potential buyers. This can involve decluttering, re-arranging furniture, and even making minor repairs or cosmetic improvements. While it’s not absolutely necessary to stage your home, it can be a good investment – especially if you’re selling in a competitive market. The average cost of staging a home is between $600 and $1,200, but it can vary widely depending on the size and complexity of the project.

Also Read: How Much Does it Cost to Sell a House in the US?

Cost of Temporary Housing

Another expense that many sellers forget about is the cost of moving. If you’re moving out of your home while it’s being sold, you’ll also need to budget for temporary housing. The average cost of a month’s rent for temporary housing can be quite expensive, so it’s important to factor this into your overall budget. Even if you’re using a professional moving company, the cost of moving can easily exceed $1,000.

Cost of Moving Out And Cost of Hiring a Moving Company

As you are selling your home, you will be moving out and also need to budget for the cost of moving your belongings. This can be a costly proposition if you have a large home and a lot of belongings. The average cost of moving long-distance is between $5,000 and $10,000. And, if you need to hire a professional moving company, the cost can be even higher. When selling a home and moving, some people choose to hire a professional moving company. The average cost of hiring reputed movers is between $500 and $2,000.

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Other Expenses

You may need to consider several other costs when selling your homes, such as advertising and marketing expenses, land transfer taxes, and legal fees. By being aware of these hidden home selling costs, you can budget for them accordingly and avoid any unpleasant surprises down the road.

Conclusion

Selling your home can be a costly endeavor, but you can better prepare yourself for the financial challenges ahead by being aware of the hidden costs involved. With a bit of planning and preparation, you can ensure that the selling process goes as smoothly as possible and end up with the best possible outcome.

Frequently Asked Questions

Why does it cost so much to sell your home?

It costs so much to sell a home because the real estate commission is generally the seller’s largest expense, costing 5% to 6% of the sale price. You may end up spending $15,000 in commissions if you sell your home for $250,000, for example. The seller’s real estate agent and the buyer’s real estate agent each get a piece of the commission.

What are some other hidden home selling costs?

Some other hidden home selling costs can include the cost of staging your home, the cost of temporary housing, the cost of moving out, and the cost of hiring a moving company. It’s important to be aware of these costs and budget accordingly.

Does the seller pay closing costs?

Closing costs are covered by the terms of the purchase agreement that was established between buyer and seller. The majority of closing expenses are typically paid by the buyer, although there are times when the seller is also charged some fees at closing.

What is included in a home inspection?

A home inspection generally includes:

  • An evaluation of the property’s condition.
  • An assessment of any necessary repairs or maintenance.
  • A report of the findings.

The inspector will also take photos of the property.

Can closing costs be rolled into a mortgage?

Yes, you may include closing costs in your mortgage, but not all lenders allow it, and the restrictions can differ based on the type of loan you’re obtaining. If you want to roll your closing expenses into your mortgage, you’ll be required to pay interest on them over the life of your loan.

How do I avoid paying too much in closing costs?

You can avoid paying too much in closing costs by negotiating with the seller to cover some expenses. You can also ask your lender to absorb some of the charges, although this is typically only possible if you obtain a government-backed loan. Finally, you can shop around for a lender who offers competitive rates and fees.

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Rostislav Shetman is the founder of 9Kilo Moving. He has been in the moving and relocation industry for more than 25 years, making him an expert in his field. Rostislav started as a helper, dispatcher and driver and has worked his way up to owning his own company. He takes great pride in his work and enjoys helping people relocate across the United States of America. When he's not working, Rostislav enjoys spending time with his family and friends. They are the light of his life and bring him happiness every day.